Data Quality

Improving Business Decisions

While Addressing a Key
Solvency II Requirement
With Solvency II, many insurers look at
data quality as primarily a regulatory issue,
especially in light of the explicit link between
data quality and capital requirements. However,
investing in data management can also help
enhance decision making, since the availability
of more detailed and more accurate data can
improve the organization’s ability to understand
the company’s “health” and identify the levers
used for managing essential activities and,
ultimately, financial results.
Many insurers are now seeking ways to address
Solvency II requirements related to data quality
while obtaining real business value from
their investments. The Solvency II directive is
generic and offers little in the way of specific
recommendations. The question, therefore,
is how to transform the data required for
Solvency II into a reliable source of information
for decision making.

1
2
Data management can still be improved at most
insurance companies

Uncertainty over data In many cases, insurers have added new

applications to legacy systems, creating
• A lack of common repositories to
store master data, possibly resulting
quality can have real complex, multi-layered and redundant
IT architectures. This can lead to data
in difficulties in data matching when
performing consistency controls (for
costs for insurers. Such duplication and less-than-optimal example, between accounting and
processes, raising concerns around data actuarial data).
uncertainty can lead quality and making it difficult for the
Due to these and other problems,
organization to get a broad view of
to over-coverage of data. Specific problems include:
insurance companies are under
considerable pressure to address the
risks, resulting in the • The use of semi-automated solutions data quality issues resulting from their
non-integrated features and processes.
additional consumption can create the risk of erroneous
processing as well as incomplete
of capital. traceability from sources to results.
This can also force users to capture
the same data more than once within
the systems.
• The lack of unique and shared
definitions as well as weak quality
controls in place on data flows
and data sources — not only
for internal data but also for
external data provided by third-
parties such as brokers or other
business partners, including
asset managers or reinsurers.

3
Solvency II regulation is pushing hard to improve
data quality and data governance

Data quality Data governance Improving data

The Solvency II regulation highlights Data governance is commonly
the importance of data quality. Three understood as the policy, organization, management helps unlock
major consultation papers (CP 33, 43 processes and control procedures which business value
and 60), cross-referencing each other, collectively describe and enforce the
provide directives on data quality, appropriate data management rules. Many insurance companies rely
especially for technical provisions, upon the most complete and
model designs and computations. If Solvency II is very clear on accurate data possible to protect
the risks pertaining to poor data themselves against contingent
According to these consultation papers1, management (capital add-ons to losses and other uncertainties.
the data should be: the Solvency Capital Requirement),
it allows some interpretation as to Despite the fact that insurers must deal
• Accurate: data must be sufficiently the implementation of data quality with large quantities of data to identify
accurate to avoid material distortion assessment and monitoring. risks and measure their exposure,
of the model output; they often do not make full use of the
Consideration should be given treasure trove of data at their disposal.
• Complete: databases must provide
to approaching data governance
comprehensive information for the
systematically with the intention of In addition to data used for
undertaking; and
developing a permanent structure. performance management or risk and
• Appropriate: data should not contain It may be beneficial, therefore, for finance reporting, it can be beneficial
biases which make it unfit for its particular attention to be given to if data also supports operations in a
intended purpose. roles and responsibilities related to consistent manner across a wide range
data quality, since data quality may of activities, ranging from marketing to
Solvency II requirements on data,
have to be aligned over time with the product development. Thus, improving
however, are not limited to data quality.
organization’s business needs and its data quality can be the first step
The new regulations recognize the
processes and systems. in producing management reports
need for dedicated data governance
to enable continuous improvements addressing activities and decision
Beyond the regulation and compliance making at all levels.
in ensuring data quality over time. requirements, data can also fuel
Although patchwork fixes may the organization’s monitoring and
provide temporary improvements, ultimately, its business decisions.
without effective data governance,
data may degrade over time.

4
Getting started

Many insurance Step 1: Identifying the Step 2: Locating data

companies are Solvency II necessary throughout the systems:
accustomed to data as a starting point tracing data flows,
charting architecture and
dealing with data Definition of the data is part of
data quality management and it identifying gaps
quality issues, but “comprises the identification of the
needs in terms of data, a detailed In Step 2, the insurer locates the data
the larger concept description of the items that should throughout its functional architecture,
be collected and the eventual
of data management relations between the different items.”
identifying source systems, their links
(e.g., the types of interfaces) and
can be more difficult Consultation paper 43 – alinea 3.34.2 dependencies, data feeding frequencies
and existing controls on the data.
to address, due to Our experience indicates that between
~200 distinct data fields (for P&C In identifying data flows, one goal
the amount of data or Life insurance companies) up to
~450 distinct data fields (for specific
may be to speed up the analysis by
grouping the data into families. A given
and the number of lines of business, like credit insurance data family can be considered as a
companies) are used in the Solvency II group of data belonging to the same
processes to assess modeling and reporting processes. functional topic and used by common
and monitor. Improving data quality involves
systems. Liabilities, for example, can
include the following information:
identifying which data has to be client (name, address, age...), contract
In the area of risk and finance, for monitored. The existence of a complete, (contract number, contract duration...),
example, insurers often are called upon updated, and shared data dictionary can product (denomination, guarantees,
to coordinate data initiatives related to strongly help in this matter. line of business…), premiums (amount,
projects such as local GAAP (Generally
frequency…), claims (nature, date,
Accepted Accounting Principles), It can be beneficial to demonstrate,
amount of surrenders…).
International Financial Reporting as well, that data used for the three
Standards (IFRS), and MCEV (Market Solvency II pillars are properly identified Once data flows are identified and
Consistent Embedded Value) as well as and defined. data located, it may then be possible to
Solvency II. Accenture has developed a describe the existing controls between
four-step methodology to help insurers The first step in building the data
and within the systems that are
improve their data reliability: dictionary is to analyze the data
established to ensure that the required
requirements, including a complete
data are monitored during their lifecycle.
1. Identifying the Solvency II necessary specification of each type of data
data as a starting point; (definition and usage). Consideration Data location, data flows and data
should be given to sharing the resulting controls can provide a base to
2. Locating the data throughout the
documentation and making it readily perform a high-level gap analysis
system and identifying gaps;
available to both business and IT people. between target requirements and
3. Defining data quality standards as-is data architecture (at the data
through controls and key It can also be beneficial for this data
family level). The gap analysis, in
performance indicators (KPIs); and dictionary to be maintained over time
turn, can help identify required
through a dedicated set of governance
4. Defining a data governance structure. improvements to data coverage, data
principles outlining organization,
flows simplification and data control
processes, roles and responsibilities.
coverage in the information system.

5
Example of a high level data mapping for an insurance company’s Solvency II reporting requirement

2.1 Policies administration system and claims 2.2 Asset management systems
2.1.2 Life & Non-life policies 2.1.3 Claims management 2.1.4 Reinsurance systems
Insurance companies

management systems systems

8 12 8 10 11 14 7

2.3 Accounting and treasury systems 2.4 Actuarial systems

1 2 4 3 5 6 8 9 10 11 12 13 15

2.5 Storage systems 2.6 Consultation and 2.7 ALM systems 2.8 Other systems
reporting systems

Data usage Solvency II reports

1 Balance sheet (local GAAP) BS-C1
BS-C1B
2 Balance sheet (IFRS)
BS-C1D
3 Balance sheet (Solvency II)
4 Own funds and analysis of changes OF-B1
C2-Summary and analysis
5 SCR calculations SCR-B2A, SCR-B3A, SCR-B3B,
SCR-B3E, SCR-B3F, SCR-B3G
6 MCR calculations MCR-B4A, MCR-B4B
7 Assets Assets-D1, Assets-D1A, Assets-D2,
Assets-D3, Assets-D4, Assets-D5,
Assets-D6
8 Technical provisions TP-E1
9 Technical provisions TP-E2
 10 Technical provisions TP-E3
 11 Technical provisions TP-E4
 12 Technical provisions TP-E5
 13 Technical provisions TP-E6
 14 Reinsurance RE-J2, RE-J3
 15 Underwriting risks TP-E7

Source: The Accenture Business Process Management (BPM) Reference Model Repository - Insurance
Operating Model

6
Step 3: Defining data duplication of the same data), integrity
(a lack of missing or inconsistent link
measures in existing applications
or new tools to implement the
quality through controls across different sets of related data), measures may be beneficial.
and timeliness (a timely availability
and KPIs of data) can further an organization’s Once the KPIs are specified, the set
efforts to secure quality data. of data quality reports can also be
The Solvency II Consultation Papers defined. This can represent a key
define data quality management as a It should be noted that not all rules contribution to the overall data
continuous process designed to assess violations have the same importance quality, and over time can facilitate
the accuracy, the completeness and and so, it may be that they should not the monitoring of data management
the appropriateness of the data. This be treated the same way. For instance, processes at the operational level,
process consists of four major areas as it may be beneficial for data quality and enable reporting on the quality of
represented in Figure 1. metrics to consider the percentage data at all levels of the organization.
of items violating a rule instead of
The measurement of data quality A large set of tools and features, such
observing individual item violations and
through KPIs can represent a as desktop reporting, enterprise-wide
these data quality metrics should be
significant amount of recurring work. web based reports and scorecards
weighted according to their criticality.
It can be beneficial for the KPIs to — including drilldown, alerts and
Defining acceptable ranges for KPIs
be pragmatically defined, first by customization are available to support
may be necessary, as achieving a 100
articulating data quality business data quality reporting. Reports
percent score in data quality is in many
rules, then by designing measurable can be published via third-party
cases unrealistic and may in fact be
KPIs based on compliance with dashboard tools and then integrated
counterproductive. One goal may be
or violation of those rules, ending into management processes such as
to find the most appropriate balance
with the definition of how, where company performance management.
between the expected benefit from
(within the information system) and
improved data quality and the cost to
when KPIs should be measured. Defining a data quality capability
achieve it.
through appropriate business rules,
A first set of data quality business rules KPIs and reporting can be a big step
Once the data quality measurement is
can be developed from existing data towards enabling a clear “vision” of
defined, the next step is to set targets
controls (with thresholds to be further data at every level of an insurance
for the resulting KPIs. These targets may
defined); these can then be extended to company. Accomplishing this often
be shared with all stakeholders based on
the targeted scope from the previous requires a dedicated organization
their roles and responsibilities.
data mapping, while conforming to the focused on putting in place action
standard dimensions of data quality. It may be beneficial to measure plans, and implementing and
Starting with the principles of accuracy, business rules compliance or violation, running data quality processes.
completeness and appropriateness can and calculate KPIs from the raw data
help the insurer reach its Solvency II frequently. Since these activities are
requirements. Extending these to the typically repetitive and workload
principles of consistency (a lack of intensive if performed manually,
conflicting information coming from automating them by setting up new
distinct data), duplication (a lack of

Figure 1. The Accenture process for data quality management

2 Definition and communication

1 Definition of quality
of objectives
measurement

Continuous improvement

4 Reporting and measures 3 Quality measurement

Source: Accenture

7
Step 4: Defining a data assets & liabilities management,
asset management, liquidity
governance structure and concentration, operational,
reinsurance and other risk mitigation
It can be beneficial to plan and techniques). It shall also oversee the
sponsor the implementation of data implementation, validation and actual
governance at specified levels of the utilization of the internal model.
company, with involvement from
2. The Internal Audit Function shall
both business and IT resources.
be totally independent and assess
Although titles (data stewards, data the overall relevance, efficiency and
priests, data czars) may vary, distinct effectiveness of all the components
roles can be assigned to better cover within the system of governance.
the activities listed in Figure 2. 3. The Actuarial Function is carried out
by skilled resources in actuarial and
As for data governance, though financial mathematics. The function
it may be very company-specific, is in charge of coordinating the
its main objectives are often the calculation of technical provisions
same: to foster an environment in (calculation oversight, methods,
which standard data management quality and sufficiency of data, back
processes are aligned with business testing against experience), and
needs; to allow the identification of expressing an opinion on the level
data quality issues close to where of reserves, the overall underwriting
they arise; and to escalate them at policy and reinsurance arrangements.
the right level of the organization
for decision and remediation. 4. The Compliance Function ensures
that an effective and efficient
The Solvency II directive and internal control system is in place.
corresponding consultation papers3 This should ensure compliance with
refer to four key functions for both current legal or administrative
the system of governance: requirement and internal provisions
(effectiveness and efficiency of
1. The Risk Management Function operations in line with the objectives,
shall assist management in designing, availability and reliability of financial
implementing and monitoring and non-financial information).
the risk management system. The
risk management system covers
all the processes, governance,
decision framework, controls and
reporting over a minimum set of
risks (underwriting & reserving,

Figure 2. Example of a data governance model

Data Quality Officer Data Owner

Sponsor that supports the data governance Responsible for policies, standards, and data quality
initiative and communicates its vision rules implementation for data within their area
Business

Data Custodian
Business referent with detailed knowledge of the
data structure, content, and appropriate use of the
Business or IT

business information Data Architect

Translate business rules into data models. Subject
Data Steward matter expert for the overall data catalog
IT referent monitoring data processing applications
IT

to ensure that data quality is supported from

technical side

8
More than a regulatory concern, data
management is a key enabler for high performance

A data quality A data quality assessment as required

by Solvency II sometimes reveals the
assessment can need for better functional architecture,
but setting up tools for measuring
provide an excellent and reporting on data quality can
help manage overall data quality.
opportunity for IT Such initiatives may also lead to the
inclusion of new business process
improvement and help management (BPM) capabilities into
decrease the cost the architecture in order to support
the Solvency II reporting process, as
of operations while well as overall data management.

increasing the level of Adding a documentation management

system can facilitate the access and
service for business maintenance of key Solvency II data
and processes documentation for all
operations and for employees involved in such processes.
Using an enterprise-wide information
decision making. search engine can help employees locate
the most appropriate information on
Improving data quality management
data and/or processes, as well as the
does not necessarily mean massive
best way to manage them.
investments in IT and changes in the
organization. Even small tuning-type Improving data management is
adjustments to the existing architecture often more than a compliance issue.
can bring quick and significant benefits. By helping turn data into reliable
information, better data management
In-depth transformation of functional
can help support operational, tactical
architecture is sometimes required
and strategic decisions that can make a
when IT architecture reflects long-
real difference in insurers’ performance.
term activity, resulting in stratified
technologies, systems and interfaces.

The management of recurring costs

and IT complexity are important
decision factors in data quality
assessment, rather than data quality
management itself. But data quality
management can be one of the
key triggers of such an effort.

9
10
Sources About the Authors About Accenture
1 Committee of European Insurance Eric Jeanne Management Consulting
and Occupational Pensions Supervisors’ Eric is an executive director – Risk
(CEIOPS) Advice for Level 2 Implementing Accenture is a leading provider of
Management, based in Paris. Specialized
Measures on Solvency II: System of management consulting services
in Risk Management and Finance for
Governance (former Consultation Paper worldwide. Drawing on the extensive
the insurance industry, and with a
33), October 2009. Accessed at: experience of its 16,000 management
focus on Enterprise Risk Management
https://eiopa.europa.eu/fileadmin/tx_dam/ consultants globally, Accenture
framework, Solvency II and Risk & Finance
files/consultations/consultationpapers/ Management Consulting works with
architecture, Eric has been with Accenture
CP33/CEIOPS-L2-Final-Advice-on- companies and governments to achieve
for more than 15 years. Leading large
System-of-Governance.pdf high performance by combining broad
transformation projects at major
and deep industry knowledge with
insurance and reinsurance companies,
2 Committee of European Insurance functional capabilities to provide
Eric helps clients transform their risk
and Occupational Pensions Supervisors’ services in Strategy, Analytics, Customer
capabilities and finance processes.
(CEIOPS) Advice for Level 2 Implementing Relationship Management, Finance &
Measures on Solvency II: Standard for Philippe Commets Enterprise Performance, Operations, Risk
Data Quality (former Consultation Paper Management, Sustainability, and Talent
Philippe is a senior manager– Risk
43), October 2009. Accessed at: and Organization.
Management, based in Paris. Specialized
https://eiopa.europa.eu/fileadmin/tx_dam/ in Business Intelligence and Data
files/consultations/consultationpapers/ Management, Philippe has been working About Accenture Risk
CP43/CEIOPS-CP-43-09-L2-Advice-TP-
Standards-for-data-quality.pdf
for the last 20 years across industries, to
help leading firms define and implement
Management
their data management architectures. Accenture Risk Management consulting
3 Committee of European Insurance
Recently, Philippe’s focus and energy has services work with clients to create
and Occupational Pensions Supervisors’
been directed to guiding, preparing and and implement integrated risk
(CEIOPS) Advice for Level 2 Implementing
supporting insurance companies in efforts management capabilities designed
Measures on Solvency II: Group solvency
to meet their Solvency II requirements and to gain higher economic returns,
assessment (former Consultation Paper
become high-performance businesses. improve shareholder value and
60), October 2009. Accessed at:
https://eiopa.europa.eu/fileadmin/tx_dam/ increase stakeholder confidence.
Franck Dhinaun
files/consultations/consultationpapers/
Franck is a manager – Risk Management,
CP60/CEIOPS-L2-Final-Advice-Group-
solvency-assessment.pdf based in Paris. Specialized in Solvency About Accenture
II data matters, Franck works with
forward thinking multi-national Accenture is a global management
insurance companies to assess and consulting, technology services and
improve the quality of their Solvency outsourcing company, with 257,000
II data, with a focus on defining a people serving clients in more than
functional architecture and implementing 120 countries. Combining unparalleled
effective data governance within experience, comprehensive capabilities
the organization for enhanced across all industries and business
risk management capabilities. functions, and extensive research on
the world’s most successful companies,
Accenture collaborates with clients to
help them become high-performance
businesses and governments. The
company generated net revenues of
US$27.9 billion for the fiscal year ended
Aug. 31, 2012. Its home page is
www.accenture.com.

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